Live From Sothebys

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Posted By: Yankeefan51

We just returned from the Sotheby's auction.

The auction, whilst interesting is painfully slow because of the
combination of phone bids, floor bids and web bids.

Generally, Sotheby's auctioneers can run through 70-80 lots
in an hours. This morning they were running at less than 40
per hour.

Sales result thus far have been mixed.

Ted Williams' spikes from his final at bat, Walter Johnson signed
ball from the final out of the 1924 World Series and a Ted Williams
1955 All Star bat realized stunning prices. The Johnson ball
went for $90,000 with the auction house premium and the Wiliams
spikes for well over $40,000.

At least 15% of the items did not sell- albeit most of those
were modestly price.

More later


Bruce Dorskind
America's Toughest Want List

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Posted By: leon

Thanks for the update. We appreciate it...

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Posted By: Josh Adams

Cool items.

The auction probably took so long because of all of Sothebys' shill bidding.

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Posted By: barrysloate

Sotheby's is allowed to place book bids on behalf of consignors who request reserves. While I know collectors don't like it, it's not really shilling. It's in the rules. But it's true you don't know whether there's a real body you are bidding against.

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Posted By: Ryan Christoff

Barry,

How is a "book bid" as you described any different than a shill bid???

-Ryan

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Posted By: leon

My belief is a shill is under the table and a "book" bid would be above table....Sothebys and Heritage both allow these above table bids. It's debatable but I am not sure I am opposed to being open about this stuff. Otherwise, how many friends of consignors are bidding on their friends stuff "underhandedly"? Again, not sure which I prefer but I do see the legitimate "it's ok" side...as well as the other side that says "no" it's unacceptable......regards

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Posted By: barrysloate

Exactly. When you go to Sotheby's you know that they are allowed to place a bid that may be a real bid or may be one that protects the consignor. I'm not saying it's anyone's favorite practice, but they are abiding by New York State auction law.

When you shill on ebay you are circumventing the rules.

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Posted By: Jay

Seems to me that this is a matter of semantics. In either case someone is protecting their interests with undisclosed bids. It should always be legal or always illegal. As long as bidders only bid what they are willing to pay I do not see it as a problem.

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Posted By: barrysloate

Jay- I agree that on some level it's an odious practice, and it's pretty frustrating when you are sitting there and the auctioneer is crying bids and you don't see anyone's hand raised, but the law allows it. So what can you do?

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Posted By: Tom Boblitt

.....

It's only when you have 'odious' situations that some of these larger auction houses--most commonly high-end art auctioneers--have engaged in over the years that it causes one to wonder.

I agree with Jay....always legal or always illegal. Unfortunately, if illegal, there are always ways to get around it.

I've not gone to Sotheby's but I have attended all 3 Hunts live auctions in Louisville and a couple in PA and think they were all handled properly.

Most of the time, they opened a lot at a certain amount, leading me to believe it was a 'floor' the consignor set or it was the fair bid of all the bidders who might have max bids in at the time. Some of the lots sold at that initial bid and some went higher based on the crowd or the phones.

I do remember a few auctions that they had lots that did not sell, prompting me to believe the 'floor' bids by the consignor were above what the market was willing to bear.

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Posted By: barrysloate

Sotheby's has gotten in enough hot water in the past that I would assume they are careful to play by the rules.

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Posted By: JimB

Do they make it clear when the house is bidding and when it is an actual customer? This seems quite important to me.
JimB

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Posted By: Jay

Jim--I believe that the answer is no. You see the house bidding but you don't know if it was the highest bid on the book being executed or a reserve bid.

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Posted By: leon

I have been to Heritage Live auctions and you don't know if it's the house or not. My guess is any auction house wouldn't disclose that info.....though I abslotulely would like to know.....

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Posted By: Corey R. Shanus

Book bidding, bids by the auction house on behalf of the consignor to bring the bidding up to the secret reserve, is nothing less than legalized fraud. It's whole premise is to induce prospective bidders to believe that there is real interest at those bids, in the hope that human nature will take over and somebody will want something even more by believing others want it. Like so many things in our society, what is legal often depends on who has the most powerful lobby, not the merits of the position.

Shill bidding, on the other hand, is something much different. Those are bids placed on behalf of the consignor (usually by his/her friend(s)) EVEN AFTER the reserve has been met (in contrast to book bidding which I believe stops at the bid increment before the secret reserve). Shill bidding, blatantly fruadulent (and to my knowledge illegal in all jurisdictions) because there is no good faith buyer placing those bids, is commonly used when the auction house and/or consignor has reason to believe there is someone out there who will pay much above the next highest bidder, and they are prepared to use all measures (even though illegal) to get every last nickel out of that person. Shill bidding is also used when the auction itself is a sham; there the auction house would be in cahoots with the shill bidder and the consignor. An instance of this would be when the auction house/consignor want to give the impression an item sold at some stupid number, when in fact it did not. The auction house benefits because it can then brag how it realizes higher prices than its competition. The consignor benefits by establishing a higher market price for his item, typically realized a year or two later when the item magically reappears at the same auction house (with of course a story how the guy who bought it a year or two earlier suddenly decided to sell it).

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Posted By: barrysloate

While Corey carried the negative aspects of the reserve book bidding to the next level, it's true that when you are sitting in the audience it all happens so fast that you can never be sure if anybody is bidding, but you still get some sense of whether the bids are real. Also, when the auctioneer bangs the hammer, he then declares "sold" or "pass." Of course, if you get caught up and overpay for the lot it doesn't matter at that point.

That's why it is always good to set a limit, but auction houses know all too well how impulsive bidders are, and they take maximum advantage of it.

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Posted By: Richard Masson

Book bidding to a reserve is not "legalized fraud" if it is properly disclosed. Consigning anything significant to a live auction without a reasonable reserve would be just plain stupid. The auction house bids the reserve against the audience until it is met, then hopes there is more than one bidder. If the price is too high to the buyer, don't bid. If the price is not high enough for the seller, don't sell. How is that unfair?

The low reserves we are now used to in our little niche of collectibles is not the norm.

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Posted By: barrysloate

But despite the low starting bids in our hobby, there are very few bargains and more often than not lots get incredible bidding. So it seems like a pretty good system.

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Posted By: bruce Dorskind

Next time your wife, significant other or generous friend asks what you
want for Christmas... tell her a pair of 1957 Yankee Cuff Links owned
by Casey Stengal. Then ask her to write a check for $108,000.

Two guys (I assume guys) on the phone slugged it out

A number of the Stengal signed Yankee balls went through the roof.

Several items we bid on (advertising pieces and a great Japan pennant)
went for 3x estimate.

The Old Professor and Edna must be smiling in heaven. At least someone
with a Yankee connection can say he had a winning season

Best,

Bruce Dorskind
America's Toughest Want List

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Posted By: Tom Boblitt

in our hobby, some auction houses allow bidding on house accounts, even though the auctions are not live. Don't know if thats on behalf of the consignors or what criteria is used.

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Posted By: Ryan Christoff

Sorry, but a "book bid" is absolute crap. Please explain to me how that could possibly be considered "above table" and different from the consignor having a friend bid on one of his items to drive the price up? The "reserve" price in the book bid system is simply the level at which the consignor tells his friend (in this case the auction house) to stopping artificially driving the price up.

I have no problem with reserves, providing they're disclosed. A "book bid" has nothing to do with a reserve.

The fact that this is considered acceptable to some says a lot about how shady this hobby really is. Borderline illegal practices are so commonplace that people just accept them as being the way things are.

Every day I understand more and more why I always get my ass kicked when I consign items and wind up paying top dollar when I win items.

I was both a consignor and a winning bidder in this Sotheby's auction. I'm going to ask if this book bidding crap took place on the lot I won, although I doubt they'd be truthful about it if this is actually happening. If I find out that was the case, they're stuck with the lot I won. That is, unless they want to sell it to me for one bid increment above the 2nd highest legitimate bid.

Fun hobby,

-Ryan

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Posted By: Corey R. Shanus

Exactly what does the auction house disclose that makes it fair? They don't tell you the reserve, only that by law that it cannot be higher than the low-end estimate. They don't announce when reciting a book bid on behalf of the consignor words to the effect -- "Hey everyone, this is not a bid from a real bidder, only a bid on behalf of the consignor". If they disclosed that, then I would agree that proper disclosure was made.

Also, what does this practice have to do with the issue of a consignor refusing to put his/her piece in an auction unless it has a reasonable reserve? Of course there is nothing wrong with refusing to sell your item for less than a reasonable price, and I agree it would be stupid to do otherwise. But why then cannot the reserve be announced and the bidding begun at the reserve price? Answer -- to try to give the impression to some prospective bidders (and remember that phone bidders could find it very difficult to know if a bid is a book bid on behalf of the consignor or a real bid) that there is real interest at those levels (when there is not) and thus try to create additional interest in the lot. So, to answer the question, by my ethics I find it unfair to try to create a false impression that there is real bid when in fact there is not.

And why do auction houses do this? Because in some cases it works. If they felt all the prospective bidders would never be fooled, why then would they feel the need to recite ficticious book bids?

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Posted By: leon

Personally I don't care for house bids either but I do have one question for you. You seem upset about house bids. Did you read the rules?

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Posted By: DD

I have been to many live auctions over the past 30 years. I also used to work for an auction house. I believe I have seen shill bidders in the audience at some auctions, and also know auctioneers that have driven up the price themselves if they have a feeling that the 2 or more bidders will go higher; sometimes they end up buying the item if the audience drops out.

Just start the item at the reserve price. If people are scared off by that, then tell the consignors to lower the reserve. The material that Sotheby's and other large houses auction off attract many big spenders. It is unlikely that they won't bid at a higher starting price, as opposed to a lower price with a hidden reserve.

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Posted By: barrysloate

If you think our hobby is bad, you should see the hoops Sotheby's and Christie's have to jump through to get great art collections.

Because of the fierce competition, they typically offer tens of millions of dollars in advance money, sometimes above and beyond a world record for a particular painter, on the hope that an even greater world's record will be set. Knowing the pressure they have to succeed, do you think those auctions are run on the up and up?

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Posted By: bruce Dorskind

Much like the real estate industry, the most important task for world class
auction houses like Sotheby's, Christies and a few others is to attract
the best quality items they can.

Their offering is all about packaging. The "blue box" and the assurance that
a 300 year old firm stands behind the authenticity of the item is what
attracts wealthy consignors.

Whilst we certainly don't care for "book bids" and recognize that they have
probably cost us thousands of dollars in the 15 years that we have bid
in Christies and Sotheby's auctions, the firms are clear in their auction
rules and at the beginning of each auction session that they can place
boo bids on behalf of the consignor.

As has been pointed out earlier, a high stated reserve discourages
people from bidding, whist the book bid leaves the impression that
there is a interest from a cadre of different sources.

Book bids will only go away if , as Barry Sloate notes, they change the law.

We wonder whether there are any states- i.e. California and Illinois and New
Jersey (you can guess why) that do not allow the auction house to bid
on behalf of the consignor.

Best,


Bruce Dorskind
America's Toughest Want List

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Posted By: Richard Masson

If Sotheby's auction procedures upset you, then you should see what goes on at thoroughbred racehorse auctions. The consignor can set a low reserve and then sit in the audience and bid, or set a higher reserve and have multiple parties make bids up to the reserve to give the appearance of a spirited auction. Everyone knows the game is played that way. The risk the consignor needs to be aware of is the risk of not selling if he gets stuck with the high bid.

The point of an auction is not to guarantee a fair price to the buyer, it is to get items sold at a price acceptable to both the buyer and the seller.

As far as Sotheby's goes, if you can't see the bid in the room, assume it is the house bidding to a reserve.

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Posted By: barrysloate

What is a "blue box?" I've never heard that term before.

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Posted By: barrysloate

Richard- Sotheby's has a bank of telephones, and a large percentage of bids come in that way. More often than not it pays to watch the people answering the phone to see if real bids are coming in.

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Posted By: MVSNYC

"Blue Box" is a reference to Tiffany's and their brilliant packaging scheme.

every girl wants the "blue box"...great marketing tool.

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Posted By: barrysloate

Got it. I'm more a "five-and-ten" kind of guy.

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Posted By: Bob

I'm with Ryan, shill bidding is shill bidding. Period. Just because it goes on all the time doesn't make it right whether it's an auction house or ebay or Moe's card shop. I also agree that you should only bid what you are prepared to pay but it still steams me when the co-signor's "buddies" are screwing around with the bids. I have consigned to numerous auction houses from Mastro on down and never, ever contacted anyone about bidding items up for me. It's just not right. I don't like auctions where the house bids on items for people who may be legit or maybe phantoms but I guess I'll just grumble and bitch because I don't know anyway around it...

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Posted By: Richard Masson

I find a distinction between shill bidding and the house bidding up to the consignor's reserve. I am primarily a buyer and know that it is not in my best interest; I just don't have a quarrel with the format and the practice if everyone knows how the game works.

In our hobby we are lucky. Low or minimal reserves are the norm, internet rather than live auctions are common, and regardless of the closing method, the chances of getting shut out are minimal. Shill bidding, when prohibited by the rules, probably only happens at the lesser auctions. If you buy from Mastro, REA et al (Barry, you are part of et al) I would be very comfortable assuming the cover bid is real.

For some, the thrill of this hobby is the hunt, or the history of the game, or acknowledging rarity, or piecing together the issuance history of an ancient group of cards. For others, it is the game of finding cards for "less than they're worth" or selling cards for "more than they're worth." The auction format is part of the fun to those sorts of folks.

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Posted By: Corey R. Shanus

You say: "I just don't have a quarrel with the format and the practice if everyone knows how the game works."

I say: The reason auction houses continue with the format and the practice is because (i) everyone does not know how the game works, and (ii) many/most know but are not always in a position to determine if the bid is real (e.g., a phone bidder) and to be safe assume it's real. Bottom line is auction houses continue with the practice because they feel sometimes it results in either a higher realized price or the item meeting its reserve. If the auction house felt there was no benefit in continuing the practice, presumably they would stop, resulting in a more efficient auction.

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Posted By: barrysloate

Corey- all your points are well taken but what you are omitting is the consignment perspective. Without all of these built in guarantees, consignors would walk. I know you will respond that if none of the auction houses placed book bids, then every one would be on an even playing field. But if one offers ironclad protection and the other doesn't, then the "honest" auction house will go out of business, and all the great consignments will go elsewhere.

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Posted By: Corey R. Shanus

The issue is not about offering ironclad protection. That can be done simply by announcing the reserve and starting the bidding at that level. The issue is about a profit-maximizing auction house's perception that book bidding to protect the reserve maximizes profits, both by inducing consignors to consign with them and knowing that however distasteful bidders feel about the practice, they'll still bid. So, yes, you're quite correct that unless and until the practice is outlawed, no auction house will discontinue the practice. But there's your answer, the law should be changed. But I'm not naive enough to believe that is going to happen anytime soon.

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Posted By: bruce Dorskind

Sotheby;s and Christies control well over 75% of the world's rare art market
(i.e. paintings that sell in excess of a $ 1million) They, despite past problems,
are very powerful organizations with an ultra elite and ulta wealthy customer
base.

Their primary objective is to satisfy that customer base One of the key
elements in that "satisfaction" equation is to ensure that when a wealthy
and/or loyal client chooses to sell his collection he or she can count on
the Auction House to realize a fair, (if not exceedingly fair price). In other
words...the reason Mr or Mrs Hedge Fund sells their Renoir through Sotheby's
or Christies is that (a) they have the customers, (b) they have the brand
and (c) they have the tools and resources to ensure the vast majority of the
consigned items will realize very substantial prices.

If we take away the "book bid" there will be far too many unhappy clients
and those clients are the very people who control nearly everything that
happens in finance in New York...and everything that happens in New York controls
America's finances...

It is all about money and power... and free markets. We live in an entreprenurial
country. When one sells anything of significant value one has only one objective
maximize return. The buyers are notified in the catalog and the opening of
each and every auction session. No one is putting a gun to their head.

As for Sotheby's, their track record with world class collections such as Halper
and Copeland and infamous items from player's estates has generally been
quite impressive. The book bid, along with the international (out of hobby)
client base are key reasons these collections were sold through Sotheby's.

Remember Bill Mastro, Rob Lifson, Don Flannagan and Barry Sloate all worked
closely with Sotheby's and/or Christies at major sales.

Whilst the book bids certainly make it more difficult for the collector, as Barry
Sloate correctly points out without the packaging merchandising and protection
we would not have the consignors and many great items would not get sold.


Bruce Dorskind
America's Toughest Want List

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Posted By: mr. moses

the greatest prices realized are those inflated by a ghost bidder for the betterment of man. A great gesture on their part that speaks to the nature of the beast. They can't protect your consignor with a reserve that is not designed to get a SINGLE bidder to the level of expectation without using a subtle disclaimer that exists in the fine print but often gets lost on someone actively bidding on an item? Two interested parties will presumably bring it to the level necessary. Granted if there is a single bidder willing to surpass the inferred (but actual) limit; the consignor and auction house would benefit from a house bid which is the reason for the contract in the first place. I just think that the auction house should have to disclose it every time they bid for the house. Today's buyer's are tomorrow's sellers. We are as a group becoming more astute and asking more questions. Probably won't make a difference anywhere for now but who knows how people and business begins to respond to anything. Money. Fear of losing it.

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Posted By: Anonymous

I'm not sure what else can be said. Don't bid more than what you are willing to pay and if you have a need to make sure the underbid is real, don't bid on anything at auction and only buy items later that don't meet their reserves (a perfectly viable alternative).

I never studied Latin, so written communication like this imprecise at best. Corey, let's have a chat about this next time we see each other.

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Posted By: David Smith

To all concerned,

How about this, the next time you are at an auction that allows book bids and you are bidding on soemthing that you think NO ONE else (book bid) is bidding on, why don't you just stop the auctioneer and ask who the bidder is?

Ask if the person is in the room, on line or on the telephone or if it is just a book bid. If they say book bid, then just tell them to cut the crap and reveal what the Reserve is. Then you can decide if you want to bid that amount or not.

This saves time and will REALLY irritate the auctioneer and auction house. It will also alert those in attendance that this crap goes on.

David

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Posted By: MVSNYC

any word on the gehrig jersey? sale price?

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Posted By: Corey R. Shanus

So what you're saying is that if book bidding to protect the reserve is outlawed, Mr. and Mrs. Hedge Fund will feel the auction process, being now more transparent and less manipulative, will not generate an exceedingly fair enough price for their magnificent works of art, and they therefore will choose not to sell. They will then become very unhappy and, through use of their financial power, take their wrath out on New York City, financial capital of America as well as home to the world's largest auction houses, thus resulting in a nation-wide recession/depression.

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Posted By: Sean C

Thanks for the update! Live auctions are always a lot of fun. Who did you go with to it?


quote
We just returned from the Sotheby's auction.

The auction, whilst interesting is painfully slow because of the
combination of phone bids, floor bids and web bids.

Generally, Sotheby's auctioneers can run through 70-80 lots
in an hours. This morning they were running at less than 40
per hour.

Sales result thus far have been mixed.

Ted Williams' spikes from his final at bat, Walter Johnson signed
ball from the final out of the 1924 World Series and a Ted Williams
1955 All Star bat realized stunning prices. The Johnson ball
went for $90,000 with the auction house premium and the Wiliams
spikes for well over $40,000.

At least 15% of the items did not sell- albeit most of those
were modestly price.

More later


Bruce Dorskind
America's Toughest Want List

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Posted By: Cobby33

If these people don't want to "scare people away," they need to come to grips with the downside of consigning to an auction house with no minimum bid/reserve and take what they can get, even if it's $.99. There's a reason certain items don't go over $.99. People who participate in these major auctions are sophisticated enough to not be "scared away" by a reasonable minimum bid/reserve.

If they're afraid that their crap won't meet the minimum bid, they should sell it at a garage sale.

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Posted By: barrysloate

This is a very interesting discussion, and I agree with Richard that if every bidder set a maximum and stopped there, the shilling would disappear. But the auction world doesn't work that way.

What every major auction house knows all too well is that their best clients are extremely wealthy and have enormous egos, and they use that information to their advantage. Most high end bidders don't set limits, but instead decide they are not going to leave the auction without going home with a specific lot. And the auction houses know this all too well. There are even bidders who will brag to the principals that they are going to win such and such a lot no matter what.

Bruce is correct that the money, power, and ego of certain bidders know no bounds. And that, for better or worse, is what makes the auction business tick. And since the law allows them to keep pushing up a bid until it reaches a certain accepted level, they will continue to do so until and unless that law is ever changed.

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Posted By: Alan

Well said Barry !!!

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Posted By: Jeff Lichtman

Corey is obviously right -- however, as in any other business, auction houses are concerned with one thing: money. And until the laws change which permit this sort of activity, they will do all that they can to maximize their takes no matter the collateral damage to bidders, society, etc.

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Posted By: Richard Masson

No, Corey is not obviously right, and of course an AUCTION (where the only thing at issue is price)is only about money. Full disclosure of reserves in advance and no book bidding is better for buyers and worse for consignors. Book bidding with no disclosure is worse for buyers and better for consignors. Who is to say one should be preferred over the other? Auction houses work for consignors, therefore there is book bidding.

There is no "right" answer here, unless it is simply that the rules need to be disclosed and understood in advance.

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Posted By: Cobby33

"There is no "right" answer here, unless it is simply that the rules need to be disclosed and understood in advance. "

This is true, however, although auction houses may "work for" consignors, it is the bidders who fund both the consignors and auction houses. No bidders, no auction house.

So, again, unless there's a movement to boycott or curtail the bidding in (a) particular auction house(s), these (albeit legal) ethically-questionable tactics will persist.

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Posted By: leon

Unfortunately we always come back to some things. "Cards" trump almost everything. If xyz Auction House has them it doesn't really matter what xyz has done, to most people. Collectors will bid. Some will have high principles and not do business with a certain company but our addiction overrides most other things....This is certainly debatable but, from experience, this is the way it is....I know there will be a handful that disagree and say "OH, but I would NEVER buy from them for this or that reason". And no doubt there are a few that won't but everyone else will.....How many folks (myself included) bid in the MemoryLane Auctions after all the crap came out about the owners history? As I have said I don't like the house bids but they are what they are. Set a number to go to and don't go farther.... regards